The present government took charge on June 5, 2013 after gaining a significant victory in the general elections mainly on the back of promises made to overturn all inefficiencies and economic mismanagement by the previous regime, which had made the life of the common man miserable. By virtue of the same, it has inherited many uphill challenges. The first seven months of this new government have passed and so it is only befitting to comment upon and evaluate its claim of improvement. Official sources claim that circular debt of Rs 480 billion has been cleared, which has been haunting the power sector for so long. Similarly, load shedding has been said to have been reduced from 18 to eight hours. The government is of the view that the development outlay has been increased from Rs 360 billion to Rs 540 billion. Austerity measures have been claimed to have been adopted to slash the prime minister’s office expenditure by 40 percent and the removal of secret and discretionary funds from different ministries are likely to save a significant amount for the national exchequer. Some 30 percent across-the-board cut was imposed on expenditure of all ministries and purchase of new vehicles was banned to result in a saving of Rs 40 billion. The challenging target of Rs 2,475 billion has been set for revenue collection for the current fiscal year. Rs 250 million has been released for repair of 50 locomotives belonging to Pakistan Railways while the release of Rs seven billion has been made for PIA. A running finance facility for Pakistan Steel has been arranged to the extent of Rs two billon.
The above official versions definitely indicate the positive impact and clear direction towards addressing these burning issues. However, there are some negative developments that have also taken place during this period. The most visible is the sharp depreciation of the rupee against the dollar, which reached about nine to 10 percent at one point but, due to some measures taken, has now been reduced to around five to six percent till now as compared to May 2013. Circular debt has again mounted to Rs 225 billion due to slower recovery and huge power losses. The duration of power outages has increased once again because a permanent solution has not been sought. Clearing of the circular debt is appreciable but a long-term strategy is required in this regard.
Foreign exchange reserves in the country have gone down from $ 11,474.3 million in May to $ 8,521 million, which is a real setback — the IMF has also suggested as much in its current report. Although foreign direct investment has increased by the hefty amount of $ 315.8 million but, at the same time, the government’s domestic debt has gone up from Rs 9,306.7 billion to Rs 10,403.2 billion, which is a source of great concern. External debt has been slightly reduced from $ 60,985 billion in March 2013 to $ 60,431 billion in September 2013. Although the Federal Board of Revenue was unable to meet its target for the first half year and fell short by about Rs 65 billion, revenue collection until December 20, 2013 stood at Rs 114 billion as compared to Rs 91.5 billion of last year to register a rise of 25 percent. About 814,981 returns have been filed this year as compared to 744,866 returns of last year to show a notable increase.
The growth of large-scale manufacturing has shown visible increase during the period from July to October as it stood at 5.7 percent, compared to 1.08 percent from last year. This is pointing towards achieving a healthy GDP growth rate of 3.59 percent as envisaged by the government. The Karachi Stock Exchange has shown growth of 49 percent, which is mainly due to its upturn in the last two to three months. The most notable failure was the inability to contain inflation as it has risen from 5.12 percent in May to 9.2 percent in December although there are some factors that are uncontrollable by the federal government. However, the common man is visibly suffering from this ground reality although the prime minister has not allowed passing on the increase of the petroleum prices to the consumers for the last two months, which is in line with the people’s desire.
There has been a marked improvement in the law and order situation, especially in Karachi, which has given some boost to the manufacturing sector. There are appreciable initiatives such as the prime minister’s youth loan scheme and privatisation scheme for loss incurring state enterprises, which are likely to add fresh blood to the economic landscape if proved successful. The government’s economic performance has, so far, been satisfactory except for a few notable exceptions.
The writer is a senior educationist
and author